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$100-Million Infusion Puts Talent Firm in Position to Deal

The investment gives ICM a war chest that could help it compete in a changing Hollywood.

November 02, 2005|Claire Hoffman | Times Staff Writer

Like any top Hollywood agent, Jeff Berg is always looking to close a deal.

On Tuesday, he sealed one of the biggest of his career by enticing a little-known Connecticut financier to invest about $100 million in Berg's International Creative Management. Home to such stars as Mel Gibson, Denzel Washington and Jodie Foster, ICM is now armed with the kind of war chest needed for Hollywood's escalating agency battles.

The agreement with private equity firm Rizvi Traverse Management comes a little more than a year after Berg met founder Suhail Rizvi, 39. Berg will remain in control of the 150-agent firm as chairman and its largest shareholder, with Rizvi given a seat on ICM's board.

With Rizvi's money, Berg has the financial wherewithal to buy smaller agencies and make other deals at a time Hollywood companies are under pressure to consolidate. A lethargic movie business, a decline in DVD sales growth and a slowing in TV syndication have increased financial stress. "It moves ICM from being a seller into being a buyer," said entertainment lawyer Ken Ziffren.

ICM's move comes as other firms, notably industry leader Creative Artists Agency, have been poaching top agents and clients from competitors. In recent years, ICM lost to competitors such stars as Julia Roberts.

Berg, 58, said the cash infusion was part of larger effort that would allow ICM's younger generation of agents to gain partnership positions as an incentive to build careers there. The money would also make it easier for the Beverly Hills agency to make outside investments.

"We wanted to keep the company private, but with investors who could give us the resources to stay in the deal," Berg said in an interview.

Berg said ICM has been romanced by a number of investors eager to stick their toes into the Hollywood game, and has worked with investment bankers over the years, most recently Allen & Co., on potential deals. Merrill Lynch & Co. also worked on the Rizvi deal.

In Rizvi, Berg has what many in Hollywood long for: a rich investor who doesn't want to hold the reins and who appears likely to resist the temptation to meddle. Rizvi, who is said to shun media attention, declined to be interviewed for this article.

Rizvi grew up in Iowa Falls, Iowa, population 5,000, where he was a competitive tennis player and graduated from high school in 1984. Former classmate Gene Newgaard remembered him as a smart guy from a modest family with a "wide circle of friends."

After a year studying business at Ellsworth Community College, where his father taught sociology, Rizvi transferred to the University of Pennsylvania's Wharton School, where he earned an undergraduate business degree in 1988.

Rizvi serves on the board of several apparel and electronic companies. His investment firm has a $250-million capital fund.

ICM's deal is unusual for the insular world of talent agencies, which typically don't seek outside financing and are owned by an elite circle of insiders. Berg's move could portend more interest by private equity firms, which are showing an increasing appetite for entertainment deals.

"I think having competitive agencies out there is good for everybody," said Jeremy Zimmer, a director at United Talent Agency. "I think the investment community is going to look at the agency business differently."

Despite its size and successes, ICM has long sought to escape the shadow of Creative Artists Agency and in recent years has had to fight off challenges from William Morris Agency, United Talent Agency and Endeavor.

Like the other major agencies, ICM boasts big-name movie stars, but much of its earnings come from packaging deals for such television shows as "Friends," "Sex and the City" and "The Simpsons."

Founded in 1975, ICM was born out of the merger of Creative Management Associates -- home to legendary agents Sam Cohn and Sue Mengers -- and International Famous Agency.

Berg began work as an agent in 1969 not long after graduating from UC Berkeley. He was named president of ICM in 1980 and chairman in 1985.

Berg has denied reports that he wants out of the business, saying he reinvested in ICM and plans to take advantage of new technologies.

"Now that this deal is done, I want to spend 100% of my time on the agency," Berg said.

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